The goal of subscription-based companies is to not just land the customer, but to keep them and expand over time. Zuora, which has always had the goal of helping companies manage subscriptions announced a new tool called Zuora Orders today, designed to help customers process renewals and more complex deals.
Zuora is hitting its 10-year mark as a company. Tien Tzuo who founded the company after leaving Salesforce as its first Chief Marketing Officer, saw a world coming a decade ago, where cloud companies (and others) would be selling subscriptions. He predicted correctly this world would require a new way of tracking and declaring this revenue, and he began a 10-year journey of building out a platform of subscription management services, which culminated in the company’s IPO in April.
Today, they announced a new product as they set out on the next 10 years, which builds on that platform.”We have a brand new product, Zuora Orders, which will sit side by side with billing and revenue recognition, and really power those two things to enable companies to focus on expanding and driving more revenue from their customer base,” he explained.
They are not creating this new service out of the blue. They have found through research that there has been a significant shift from subscription growth related to acquiring new customers to growth from existing customers. In fact, Tzuo said that 70 percent of the revenue flowing through the Zuora system today is coming from existing subscriptions (rather than newly acquired customers), a number that has doubled over the last several years.
As though to prove this point, in its most recent earnings report, Box CEO Aaron Levie talked about how his company was using a strategy of expanding inside existing customers to grow their revenue. “As we discussed last quarter, our focus is on driving deeper, more strategic relationships with our customers, resulting in higher growth and bigger deals,” he told analysts in the earnings call.
By expanding the services it is offering on the Box platform over the last several years, it has created opportunities to increase business with existing customers — and it seems to be working. “Importantly, our new products continue to drive growth with new products attached to two-thirds of our 6-figure deals,” Levie said.
Zuora made the announcement at their Subscribed Conference taking place in San Francisco this week.